Why the Republic of Congo’s Oil-Driven Growth Model Must Change?

The Republic of Congo’s Path to Sustainable Development

The Republic of Congo has been facing a prolonged recession, leading to a significant increase in poverty and undermining previous poverty reduction efforts. The percentage of the population living below the international poverty line of US$2.15 a day in 2017 purchasing power parity has risen from 35.4 percent in 2011 to an estimated 52.5 percent in 2022. To address this challenge and achieve sustainable development, the World Bank’s recently released Country Economic Memorandum highlights the urgent need for the Republic of Congo to diversify its national assets, strengthen institutions, develop human and physical capital, and pursue a more balanced exploitation of natural resources.

The Challenges Faced by the Republic of Congo

• Natural capital remains the largest asset and source of wealth, accounting for around 40 percent of Congo’s total wealth.
• Weak governance and institutional capacity contribute to inadequate oil revenue collection compared to peer countries, hindering government finances.
• Despite the steady accumulation of physical capital through private and public investment, basic infrastructure coverage remains insufficient.
• Insufficient investment in human capital, with limited expenditures on health and education, leads to lagging human development outcomes and hampers workforce productivity.
• Most critically, the decades-long exploitation of natural resources hasn’t been accompanied by the establishment of robust institutions, vital for effectively transforming natural resource revenues into physical and human capital assets.

To accelerate broad-based economic growth, it is crucial to focus on productivity gains, which rely on a country’s competitive environment, digital adoption and skills, access to electricity, and trade openness. To attract investment to the non-oil sector, it is necessary to level the playing field and reduce market distortions. State-owned enterprises (SOEs) in Congo currently hinder the private sector, and the absence of a comprehensive competition legal and regulatory framework exacerbates the issue. Moreover, the lack of reliable electricity, inadequate internet infrastructure, and high service prices impede the adoption of digital technology and the development of digital skills, thereby undermining firms’ productivity. Additionally, poor infrastructure, high tariffs, logistics costs, and non-tariff measures pose obstacles to trade development. Furthermore, the untapped potential for ecotourism in Congo’s natural habitats, including its lush forests housing mountain and lowland gorillas, forest elephants, chimpanzees, and diverse species of birds and fish, is hindered by difficult and expensive access.

Policies and Investments for Economic Growth

• Remove barriers to competition by reducing state-owned enterprises’ market dominance, encouraging private sector involvement in electricity and telecommunications, and modernizing competition laws and enforcement capacity.
• Facilitate digital transformation by enabling private sector participation, establishing regulatory and legal support for digital financial services, fostering digital technology adoption, and building digital skills.
• Enhance the supply of reliable electricity by restoring profitability, revitalizing regulation, and investing in transmission and distribution infrastructure.
• Improve trade competitiveness and diversification by reducing tariffs, reviewing non-tariff measures, concluding regional trade negotiations, and strengthening local markets.
• Boost logistics efficiency by scrutinizing public-private partnership contracts and implementing unified information technology systems for maritime trade.
• Develop ecotourism potential through improved access to Congo’s natural habitats, protect and sustainably manage the lush forests and diverse wildlife, allocate funding for conservation efforts, and enhance transport infrastructure and marketing to unlock the potential of ecotourism.

By implementing policy reforms and making strategic investments in these priority areas, the Republic of Congo can achieve its economic diversification objectives and pave the way for a more prosperous future. 

SDGs, Targets, and Indicators

1. SDG 1: No Poverty

   • Target 1.1: By 2030, eradicate extreme poverty for all people everywhere
   • Indicator 1.1.1: Proportion of population living below the international poverty line

2. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation, including through a focus on high-value-added and labor-intensive sectors
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation, and encourage the formalization and growth of micro-, small-, and medium-sized enterprises, including through access to financial services
   • Indicator 8.1.1: Annual growth rate of real GDP per capita
   • Indicator 8.2.1: Annual growth rate of real GDP per employed person
   • Indicator 8.3.1: Proportion of informal employment in non-agriculture employment, by sex

3. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
   • Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries
   • Indicator 9.1.1: Proportion of the rural population who live within 2 km of an all-season road
   • Indicator 9.2.1: Manufacturing value added as a proportion of GDP and per capita

4. SDG 11: Sustainable Cities and Communities

   • Target 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums
   • Indicator 11.1.1: Proportion of urban population living in slums, informal settlements, or inadequate housing

5. SDG 12: Responsible Consumption and Production

   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
   • Indicator 12.2.1: Material footprint, material footprint per capita, and material footprint per GDP

6. SDG 14: Life Below Water

   • Target 14.2: By 2020, sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts, including by strengthening their resilience, and take action for their restoration to achieve healthy and productive oceans
   • Indicator 14.2.1: Proportion of national exclusive economic zones managed using ecosystem-based approaches

7. SDG 15: Life on Land

   • Target 15.2: By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and substantially increase afforestation and reforestation globally
   • Indicator 15.2.1: Progress towards sustainable forest management

Explanation:

1. SDG 1: No Poverty is addressed in the article as it highlights the rise in poverty in the Republic of Congo due to the protracted recession. The article mentions the percentage of the population living below the international poverty line.

2. Under SDG 8: Decent Work and Economic Growth, several targets can be identified based on the article’s content. These include sustaining economic growth, achieving higher levels of economic productivity through diversification and innovation, and promoting development-oriented policies that support job creation and entrepreneurship.

3. The article mentions indicators such as the proportion of the population living below the international poverty line (Indicator 1.1.1), annual growth rate of real GDP per capita (Indicators 8.1.1 and 8.2.1), proportion of informal employment in non-agriculture employment (Indicator 8.3.1), proportion of the rural population living within 2 km of an all-season road (Indicator 9.1.1), manufacturing value added as a proportion of GDP and per capita (Indicator 9.2.1), proportion of urban population living in slums or inadequate housing (Indicator 11.1.1), material footprint per capita and per GDP (Indicator 12.2.1), proportion of national exclusive economic zones managed using ecosystem-based approaches (Indicator 14.2.1), and progress towards sustainable forest management (Indicator 15.2.1).

4. Table:

| SDGs | Targets | Indicators |

|——|———|————|

| SDG 1: No Poverty | Target 1.1: By 2030, eradicate extreme poverty for all people everywhere | Indicator 1.1.1: Proportion of population living below the international poverty line |

| SDG 8: Decent Work and Economic Growth | Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries | Indicator 8.1.1: Annual growth rate of real GDP per capita |

| SDG 8: Decent Work and Economic Growth | Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation, including through a focus on high-value-added and labor-intensive sectors | Indicator 8.2.1: Annual growth rate of real GDP per employed person |

| SDG 8: Decent Work and Economic Growth | Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity,

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: blogs.worldbank.org

 

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